Virgin Media 2013 Annual Report Download - page 125

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III - 15
Realized and unrealized gains (losses) on derivative instruments, net
Our realized and unrealized gains or losses on derivative instruments include (i) unrealized changes in the fair values of our
derivative instruments that are non-cash in nature until such time as the derivative contracts are fully or partially settled and (ii)
realized gains or losses upon the full or partial settlement of the derivative contracts. The details of our realized and unrealized
gains (losses) on derivative instruments, net, are as follows:
Year ended December 31,
2012 2011
in millions
Equity-related derivative instruments (a)............................................................................................. £ 174.1 £ (43.3)
Cross-currency and interest rate derivative contracts (b)..................................................................... (25.2)(8.3)
Foreign currency forward contracts ..................................................................................................... (0.8) 0.9
Total................................................................................................................................................. £ 148.1 £ (50.7)
______________
(a) These amounts represent activity related to the Virgin Media Capped Calls. The fair values of our equity-related derivative
instruments are primarily impacted by the trading prices of the underlying security.
(b) The loss during 2012 is primarily attributable to (i) losses associated with decreases in market interest rates in the pound
sterling market and (ii) losses associated with an increase in the value of the pound sterling relative to the U.S. dollar. In
addition, the loss during 2012 includes a net gain of £6.3 million resulting from changes in our credit risk valuation
adjustments. The loss during 2011 is primarily attributable to the net effect of (i) a gain associated with the reclassification
from accumulated other comprehensive income to earnings of £31.1 million in conjunction with the discontinuation of
hedge accounting on our derivative instruments previously designated as cash flow hedges, (ii) losses associated with
decreases in market interest rates in the pound sterling market, (iii) losses associated with settlements of derivative
instruments that were note designated as hedges for accounting purposes and (iv) gains associated with a decrease in the
value of the pound sterling relative to the U.S. dollar. In addition, the loss during 2011 includes a net loss of £8.6 million
resulting from changes in our credit risk valuation adjustments.
For additional information concerning our derivative instruments, see notes 4 and 5 to our consolidated financial statements.
Foreign currency transaction gains (losses), net
Our foreign currency transaction gains or losses primarily result from the remeasurement of monetary assets and liabilities
that are denominated in currencies other than the underlying functional currency of the applicable entity. Unrealized foreign
currency transaction gains or losses are computed based on period-end exchange rates and are non-cash in nature until such time
as the amounts are settled. The details of our foreign currency transaction losses, net, are as follows:
Year ended December 31,
2012 2011
in millions
Cash and restricted cash denominated in a currency other than the entity’s functional currency........ £(7.7) £ 2.9
U.S. dollar denominated debt issued by our company......................................................................... (0.1)(2.3)
Other..................................................................................................................................................... 1.5 (3.0)
Total................................................................................................................................................. £(6.3) £ (2.4)
Other income, net
Our other income, net, decreased £90.3 million during 2012, as compared to 2011, due primarily to a refund received in 2011
related to an agreement with the U.K. tax authorities regarding the VAT treatment of certain of our revenue generating activities.